Yahoo CEO Mayer revamps email in first big product move

The headquarters of Yahoo Inc. is pictured in Sunnyvale, California, May 5, 2008.Robert Galbraith

SAN FRANCISCO (Reuters) - Yahoo Inc rolled out new versions of its popular Web email on Tuesday, the first major product makeover since Chief Executive Marissa Mayer took the helm of the struggling Internet company five months ago.

Yahoo released new versions of its Yahoo Mail product for smartphones and tablets - in keeping with Mayer's focus on mobile devices - and a revamped version of its Web-based mail product for PC users that cuts out ancillary features and that the company said delivers faster performance.

"You've told us loud and clear that you want fewer distractions when it comes to email. You want to quickly login, communicate, and get on with your day," Mayer said in a post on Yahoo's official blog on Tuesday.

Yahoo is the No. 1 Web email product in the United States and No. 3 worldwide, behind Google Inc's Gmail and Microsoft Corp's Hotmail, according to comScore.

But the number of unique users of Yahoo email declined 16 percent in November from a year earlier in the United States and 7 percent worldwide in October, according to comScore. Gmail's unique users increased 25 percent in the U.S. in November and 20 percent worldwide in October.

Analysts say Yahoo's email decline also owes partly to the broader trend of younger Internet users who prefer to communicate with text messages rather than email.

Mayer, 37, is moving to revitalize Yahoo's various Web products and reverse years of declining revenue. A former Google executive, Mayer is widely admired in Silicon Valley for her Web product savvy, though some analysts and investors have expressed caution, noting that Mayer has never before led an entire company as CEO.

She has said her top priority is to create a coherent mobile strategy for Yahoo and that she intends for at least half of the company's technical workforce to be working on mobile products.

As part of Tuesday's announcement, Yahoo unveiled an update to its mobile email app for smartphones based on the Android operating system, as well as Yahoo's first stand-alone app for Apple's iPhone.

Yahoo also released a version designed for tablets and PCs based on Microsoft's new Windows 8 operating system.

Vivek Sharma, General Manager of Yahoo Mail & Messenger, said the group of new mobile apps was part of Yahoo's goal of ensuring that its products are available across all major mobile platforms -- a move that he said should help Yahoo's email stay popular with the younger generation of users.

"Most of the new users, especially young ones, are using mobile Internet devices. So the first order of things is to make sure there are native experiences for them," said Sharma referring to mobile apps that are specially designed for smartphones.

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The new PC version of Yahoo Mail features fewer ads, primarily by doing away with pass-through Web pages that users previously encountered before they could access their inbox and which appeared after a user sent an email.

Eliminating those pages, and improvements to the way Yahoo displays its email Web pages, means that users can now reach their inboxes 40 percent faster, Sharma told Reuters in an interview on Tuesday.

Yahoo's email product is an important piece of Yahoo's overall online business, serving as a conduit to bring in users which Yahoo then tries to redirect to its other websites, such as news articles, stock quotes and videos.

By simplifying the product's look, Yahoo could increase the amount of time that users spend visiting its online properties, said RBC Capital Markets analyst Andre Sequin.

"A website can be incredibly useful, but if a user interface is annoying or has too many flashing ads, it can drive a person away," said Sequin.

He compared Yahoo's email revamp to one of the key accomplishments that Mayer is credited with at Google: the sparse homepage, which is free of ads and prominently features a search engine box surrounded by white space.

"Improve the experience on mail and there's a good chance you can get people to stay engaged with Yahoo properties for a long time," said Sequin.

Shares of Yahoo were up 11 cents to $19.54 in midday trading on Tuesday.

Yahoo's stock has risen 25 percent since Mayer became CEO in July, reaching its highest level since September 2008 when Yahoo co-founder Jerry Yang was CEO.

The years between Yang and Mayer were tumultuous ones at Yahoo, as the Web pioneer cycled through four different chief executives and a variety of strategies.

Yahoo ranks among the world's most popular websites, with roughly 700 million monthly visitors. But revenue has eroded due to competition from Google and Facebook and changes in the online advertising market that have compressed prices for the online display ads that are key to Yahoo's business.

Many analysts and tech-industry observers say Yahoo's online products have failed to keep up with rivals when it comes to integrating innovative mobile and social media features.

Reporting by Alexei Oreskovic in San Francisco and Jennifer Saba in New York Sayantani Ghosh in Bangalore; Editing by Joyjeet Das, David Gregorio and Bernard Orr